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Guest Post: Give Unto Caesar - What To Pay When You're Selling

Tyler Durden's picture




 

Submitted by Jeff Clarke of Casey's Gold & Resource Report

Give unto Caesar - What to Pay When You're Selling

Proper planning with your finances is incomplete until you consider the endgame consequences of your investment decisions today. So, what are the tax consequences of selling gold, gold ETFs, and gold stocks?

There’s lots of conflicting and inaccurate tax information on the Internet about this. We know of one site that claims the sale of silver Eagles is exempt from capital gains tax due to some obscure law (not true). So, let’s nail down the current tax rules for selling gold in the U.S.

[The following information pertains to U.S. taxpayers only and is not intended as nor should be considered personal tax advice. Always consult a financial planner and/or tax professional before investing.]

?The IRS considers gold a “collectible” and will tax your capital gains at a 28% rate. This designation includes all forms of gold (other than jewelry), such as...

  • All denominations of gold bullion coins and numismatic/rare coins, gold bars, and gold wafers
  • ETFs like GLD, SLV, etc. (closed-end funds have different rules; see below)
  • Any electronic form of gold like GoldMoney and Bullion Vault
  • Any “paper” or certificate forms of gold, such as Perth Mint Certificates and EverBank accounts
  • All forms of pool gold, rounds, and commemorative coins

And the same designation and rules apply to silver, platinum, and palladium.

?“Reporting” requirements can be confusing. It is true that precious metals dealers aren’t required to report certain small sales to the IRS – but that doesn’t relieve you of the obligation. If you sold one gold or silver coin to your local dealer, he is not obligated under current regulation to report the sale. But selling at a profit requires you to report it and pay 28% tax on your gain.

Keep in mind that the Patriot Act obligates a dealer to report any “suspicious customer activity.” Therefore, don’t expect a wink from your dealer if you proclaim you won’t be reporting your sale or ask him to “book” only half the coins you sell him. There are people sitting in prison who’ve tried this.

?Gold stocks are not designated as a collectible and are therefore subject to the standard capital gains tax rates like all other stocks.

?Gold jewelry sales are not reportable. This makes the Heirloom Collection an attractive consideration and an excellent diversification maneuver (for both financial and romantic reasons!).

?We wouldn’t advise making your investment decisions based solely on tax considerations. You should own both gold and gold stocks for different reasons – gold for wealth protection and gold stocks for profit potential.

?There’s a lobbying arm for our industry, the Industry Council for Tangible Assets. Their efforts are mostly for dealers, but their website contains valuable information on this topic.

PFICs: Blessing or Curse?

For U.S. investors, there’s one more tax consideration if you own, or plan to own, a closed-end fund (whether it’s precious metals or otherwise).

For example, the Central Fund of Canada (which holds gold and silver bullion) is considered a Passive Foreign Investment Corporation (PFIC) for U.S. investors. This is a complex topic, but what I learned could save you some dinero now and some hassle later if you own a foreign closed-end fund like this one.
 
Keeping it simple, if you own CEF, you can qualify for the standard capital gains tax rates, instead of the 28% collectibles rate, if you file a timely and valid Qualified Electing Form, or QEF. There are several options you can take with a PFIC, but this is the most common election.

Even if you don’t sell the fund in any given year, you must file this form every year. If you don’t complete an annual QEF or make one of the other elections, you could get hosed when you eventually do sell because your gain will be considered ordinary income, forcing you to pay interest and penalties on top of the regular tax.

You can hold a PFIC stock for years without paying tax, but if you haven’t made a QEF or other election, you get the bad result we’re describing when you sell. Further, if the PFIC company reports income in a given year, this income is reportable and taxable as regular income that year, even if no stock was sold and even if the stock ended down on the year.

The point here is obvious: don’t blindly buy into a PFIC.

The QEF benefit is clear: you can cut your tax liability up to 46%, the difference between the 15% long-term capital gains rate and the 28% collectibles rate. Yes, capital gains rates are scheduled to rise next year, but this option still reduces your tax liability.

A successful investor is an informed investor, and you should read the prospectus of any closed-end fund before buying. And if you don’t want to mess with the tax hassle, use an ETF instead.

 

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Wed, 06/02/2010 - 16:49 | 390355 buzzsaw99
buzzsaw99's picture

They're out of their flipping minds if they think I'm paying cap gains taxes on PMs.

Wed, 06/02/2010 - 16:53 | 390363 tmosley
tmosley's picture

Make normal, rational men into criminals.  This is what they want.  It is difficult to rule a nation of lawful men, but a nation of criminals can be controlled, first through guilt, then through "righteous" violence.

Wed, 06/02/2010 - 17:03 | 390377 ZerOhead
ZerOhead's picture

The more they print the more you pay! Brilliant!

I'm not sweating it though...  and you should see my new jewelry collection... :)

https://www.gpscoins.com/catalog/images/gps%20gcaeh%200001.jpg

(Mr. T would be proud!)

Wed, 06/02/2010 - 17:07 | 390401 buzzsaw99
buzzsaw99's picture

Nice!

Wed, 06/02/2010 - 17:18 | 390411 ZerOhead
ZerOhead's picture

And don't forget the matching keychains Buzzy... one for every key I own! (A little glue and some string... you'd be amazed at what passes for jewelry these days! :)

http://www.strapya-world.com/images/medium/294/294-470261_MED.jpg

Wed, 06/02/2010 - 17:30 | 390442 Yardfarmer
Thu, 06/03/2010 - 09:44 | 391520 chumbawamba
chumbawamba's picture

He could use some AutoTune.

I am Chumbawamba.

Wed, 06/02/2010 - 17:53 | 390487 buzzsaw99
Wed, 06/02/2010 - 18:04 | 390504 ZerOhead
ZerOhead's picture

Joe Jones when gold was $300/oz... one smart motherfu%&er! I'll be sure to empty my pockets and take off my necklaces before I go for a swim! :)

Wed, 06/02/2010 - 17:10 | 390406 Dr. No
Dr. No's picture

I have seen necklaces with a 1/0 oz American eagle, or some other bullion hanging from it.  A gold chain with 400 oz COMEX bar attached to it?  I know art when I see it!!

Wed, 06/02/2010 - 17:20 | 390422 ZerOhead
ZerOhead's picture

And no doubt you'll know hernia when you feel it!

Wed, 06/02/2010 - 17:24 | 390427 boricuadigm-shift
boricuadigm-shift's picture

+1 Wow... Thats funny... :-)  Thanks for a good afternoon laugh.

Wed, 06/02/2010 - 19:21 | 390692 Oracle of Kypseli
Oracle of Kypseli's picture

It's time to repeat this story one more time.

While I was traveling in the Sinai dessert, I stopped at a town to buy gold jewelry. A Bedouin family traveling with Camels was buying 22K gold wire. (Semi-circle profile 1.4″ wide.) At the end of the bargaining, the store owner cut the wire into several 6-7 inches long pieces and crudely created bracelets. The Bedouin wife dressed in long black garb lifted her long sleeves and slipped the bracelets into her arms. To my amazement it looked like she had bracelets going al the way up to her underarms.

The owner explained to me later that they were traveling between Egypt, Israel, Gaza, Jordan and other countries. No trust in paper money and counterfeit bills. Any time they make money on trading, they buy more gold wire, anytime they need money, they go to the gold market of whichever country they are in and sell bracelets.

Footnote: assay kits range from $15 for acid testing to $200 for electronic sophisticated ones.

18k gold will price at 3/4 of the spot price of a $24k oz.

Wed, 06/02/2010 - 20:58 | 390853 msjimmied
msjimmied's picture

The way the Indians got around the $200 that the government would allow in exchange while they had currency controls, was to wear a lot of gold jewelry on their way out of the country. At their destination, they go to an Indian jeweler who would pay them in the local currency. There was the "Hawala" method of shadow banking as well. Most of my physical is in 24k jewelery. Never wear the stuff. All I need is an Indian jeweler and I'm in cash. If you decide to buy the jewelry, go for the plain bracelets, in 1/4 ounce, 1/2 ounce or an ounce. You are never going to wear it anyway, too soft. When you sell it, it is the weight of the gold that counts, so don't get fancy.

 

Wed, 06/02/2010 - 17:39 | 390430 Crab Cake
Crab Cake's picture

TM you nailed it sir.

Play their game their way, and pay them exorbinant tribute for the pleasure, or be criminalized.

A bit off topic, but what else would you expect from a cabal that makes a plant illegal; next up oak trees and dandelions.

Wed, 06/02/2010 - 20:55 | 390844 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Yes and cannabis has everything to do with this financial collapse.  Just imagine, weed had been legal since day 1 we would not have had any wars.  This because no one would be all uptight.  We would have a had a huge surplus of funds to work with, hemp oil could have mitigated peak oil, and we would all be without cancer.  This and we would have never let the banksters take over.  For real.

Cypress Hill - I Wanna Get High:

http://www.youtube.com/watch?v=_V5YvDyn3YE

Cypress Hill : Hits From The Bong:

http://www.youtube.com/watch?v=UmjXY1BDMEA&feature=related

Wed, 06/02/2010 - 20:58 | 390851 Mr Lennon Hendrix
Mr Lennon Hendrix's picture
Joe extrapolates. Joe Rogan Solves the War with Pot:

http://www.youtube.com/watch?v=W6cZdSJvOME

Wed, 06/02/2010 - 21:08 | 390870 Dantzler
Wed, 06/02/2010 - 16:55 | 390365 Teaser
Teaser's picture

You're right, they're out of their flippin minds.

Wed, 06/02/2010 - 17:52 | 390485 LowProfile
LowProfile's picture

I expect many estate lawyers will find during probate that physical gold coins will have been stolen without the deceased's knowledge.

Stealin' from the dead, I tell ya!  Criminals!

Wed, 06/02/2010 - 17:56 | 390490 JohnG
JohnG's picture

 

"Do not expect men to remain good when thier means of survival has been made evil."

 

--Ayn Rand

Wed, 06/02/2010 - 18:38 | 390577 DosZap
DosZap's picture

Unless I missed it in the Blog, if you sell in less than a year, your tax is 15% on the gains..28% after a Year.

Wed, 06/02/2010 - 20:14 | 390778 akak
akak's picture

And isn't the 28% rate quoted the MAXIMUM rate, depending on income?

I don't think this 28% cap tax rate on bullion is across-the-board, regardless of the nominal gain.

Wed, 06/02/2010 - 19:04 | 390637 nmewn
nmewn's picture

Exchanging AFTER tax, state sanctioned "legal tender" paper currency for a state sanctioned "legal tender" metal currency...and paying a hefty PREMIUM to boot to do so, every transaction...and they in turn tax said metal currency when reverting back to paper???...how trustworthy.

I bet JP Morgan owes a couple tons on the silver they've got in their vaults (snark)...and shorted with paper...LOL.

Gosh...seems to me without them knowing what the "paper price" paid at purchase is...ya know I'm really not very good at picking PM bottoms...it's genetic I think...was 1237 the bottom???...if not, I got taken.

I may need to find a more "trustworthy" source for my next purchase ;-)

Wed, 06/02/2010 - 21:59 | 390921 Iam_Silverman
Iam_Silverman's picture

I agree with your line of thinking.  To simplify, isn't receiving a gold/silver/platinum/palladium coin when tendering paper money the same as "getting change"?  And shouldn't converting your change back to FRN's be the same as delivering any other coin to a person who will return paper money the same thing - but in reverse?

 

American Eagles - change I can believe in!

Wed, 06/02/2010 - 23:35 | 391074 DoChenRollingBearing
DoChenRollingBearing's picture

Hire your kid for $100 / day.  Pay him/her 2 Gold Eagles ($50 legal tender).

Or even better give it away!  200 Gold Eagles ($50) per year = $10,000!

...

A message to .gov (H/T to Chumbawamba):

I fart in your general direction!

Thu, 06/03/2010 - 09:15 | 391464 robobbob
robobbob's picture

Some one has been there, done that,

NOT a good plan

http://www.lvrj.com/news/46074037.html

Thu, 06/03/2010 - 09:53 | 391539 chumbawamba
chumbawamba's picture

Only because Kahre opened a hole in the tax structure's space-time continuum and the government had to invoke Satan to close it back up again.

Kahre is just one more political prisoner of the banksters.

I am Chumbawamba.

Wed, 06/02/2010 - 19:26 | 390710 dark pools of soros
dark pools of soros's picture

totally agree..  since I doubt most of us would sell any large amounts until AFTER the shit hittith the fan, then the rules change or go away completely anyway

Wed, 06/02/2010 - 20:39 | 390822 Crisismode
Crisismode's picture

Taxes,

 

First and Foremost,

 

Have since time immemorial been set up through a simple but very effective dialectic . . .

 

To wit . . . .

 

A Government is created.

 

Its first order of business is to create a system of taxation

 

for the purpose of transfering the maximum amount of monies possible

 

from the Fealty to the Nobility.

 

And 'twas ever thus.

 

 

Wed, 06/02/2010 - 16:52 | 390360 ConfederateH
ConfederateH's picture

"don’t blindly buy into a PFIC.

Isn't that hidden in Barney Frank's underpants?

Wed, 06/02/2010 - 16:51 | 390361 crosey
crosey's picture

As usual, tax code that is too complicated.  Alternative:

10% flat personal income tax over $50,000 income

No deductions, no loopholes

Constitutional amendment requiring an annual balanced budget, no loopholes (including unfunded liabilities)

Gold standard on reserve currency

Wed, 06/02/2010 - 16:59 | 390375 ConfederateH
ConfederateH's picture

Crosey, it is far too complicated.  But what else would you expect with Geitner in charge of Treasury, Rangel of ways and means, and Frank leading finance services.

Face it, the entire US government is a farce, and only complete idiot like Denninger would try to claim that tax avoidance is somehow immoral.

The US is the only country in the world that cares so little about expats that it tries to tax their entire world wide income.  No wonder that there is a total stampede of expats and international corporations trying to pry off Barney Frank's yoke of enslavement. 

Wed, 06/02/2010 - 17:48 | 390474 LowProfile
LowProfile's picture

Some might go so far to say that tax avoidance is your patriotic duty.

Wed, 06/02/2010 - 17:15 | 390413 Mako
Mako's picture

Absolutely no reason to have a personal income tax rate at any level of government, of course most people confuse what the income tax is and isn't. 

http://www.reclaimmichigan.com

Wed, 06/02/2010 - 18:53 | 390605 DoChenRollingBearing
DoChenRollingBearing's picture

Income Tax is BAD because .gov sticks its snout into our personal privacy.

Dump the Income Tax and VAT us or Sales Tax us.

Thu, 06/03/2010 - 07:22 | 391326 Mako
Mako's picture

No reason nor justification for a personal anything either at the income level or retail level.  All taxes should appear to be invisible to them unless they are involved in a public right. 

Wed, 06/02/2010 - 17:24 | 390425 BlackBeard
BlackBeard's picture

Hah!  You'd be asking your public servants to fire themselves if they ever did something so reasonable!

Wed, 06/02/2010 - 17:01 | 390364 Mako
Mako's picture

I gave up on lawyers a long time ago.  I even had this one lawyer say the DA could prosecute me without a complaint and summons for a traffic ticket.   It was actually a friend of the family.   Later I showed him my dismissal for lack of service and process of service.  To think I would take advice from someone like that.  And if you go to 99.99% of all lawyers they would tell you the same thing. 

Wed, 06/02/2010 - 17:04 | 390388 rrbluefin
rrbluefin's picture

I'll pay my cap gains with lead.  The hollow point copper jacketed variety.

Wed, 06/02/2010 - 17:05 | 390394 BobPaulson
BobPaulson's picture

The bullion I bought in Canada had no tax. I will not declare when I sell, full stop. Of course this means I have to sell in small quantities for cash. In person is best.

Wed, 06/02/2010 - 17:26 | 390431 BlackBeard
BlackBeard's picture

Do it on Ebay.  Fat Premium, just make sure you don't clear over 20K/mth in paypal.

Wed, 06/02/2010 - 17:48 | 390475 darkpool2
darkpool2's picture

when you NEED to sell, there will no longer be paper trails to worry about.....and you probably wont be accepting green-backs for it either !

Yes, Canada is one solution....

Thu, 06/03/2010 - 10:09 | 391576 BobPaulson
BobPaulson's picture

I have a bit of an advantage cause I live in Canada but you can buy coins with a generic money order that you get from the post office. All cash, name on nothing. Just don't get mugged in the parking lot.

Wed, 06/02/2010 - 17:08 | 390404 Sudden Debt
Sudden Debt's picture

TAX ON SELLING GOLD??!!

 

JUST SELL IT ON EBAY!!

Wed, 06/02/2010 - 17:23 | 390424 AR15AU
AR15AU's picture

Starting next year, paypal will issue a 1099 for all sales... CL / cash is what its looking like...

Wed, 06/02/2010 - 18:43 | 390586 DosZap
DosZap's picture

Starting next year, ALL transactions over $600.00 will require 1099's.

If you sell ONE ounce, or 500, at a reputable  PM's Dealer, you WILL get a 1099...........

And you best keep up with the cost basis(invoice), and sale price.

Look for (unless the House is taken back in Nov,and that's usre no done deal), for a FAR higher rate of taxation on PM deals..............

They do not like them to begin with as we know.

Wed, 06/02/2010 - 21:06 | 390861 akak
akak's picture

"Starting next year, ALL transactions over $600.00 will require 1099's."

If there is ever going to be ANY reason to start a real modern-day Tea Party and tax rebellion, this it it!  This is going to be so fucking onerous, particulary for small businesses, which I believe it is designed to hamper and further push into extinction.

JUST SAY "NO!" TO 1099s!

Wed, 06/02/2010 - 17:16 | 390416 AnAnonymous
AnAnonymous's picture

Who cares about selling? Gold is money and people wont return to fiat currencies. No return to fiat currencies, no tax paid on selling gold.

Wed, 06/02/2010 - 18:46 | 390591 DosZap
DosZap's picture

Correct, IF and WHEN(don't hold your breath)it's declared MONEY...as of now, as TD put up, it's not.

 

Gotta remember the SlumDogs who are in charge..........never met a Democrat that diod not love to soend OTHER folks money, or Tax you to death.Literally.

IF B_HO, retians the Senate/House, I look for a mass exodus of expats to start flowing OUT.

Wed, 06/02/2010 - 19:03 | 390634 legerde
legerde's picture

Where to go?    Ive seen some discussion groups to try and collaborate on ideas for where to go...  Any ideas?

Wed, 06/02/2010 - 22:58 | 391015 Fred C Dobbs
Fred C Dobbs's picture

I'm going to the Philippines.  You can get along there speaking english.  Doug Casey says Argentina. 

Wed, 06/02/2010 - 23:38 | 391083 DoChenRollingBearing
DoChenRollingBearing's picture

Peru is an imperfect country, but I am all set (my wife was born there, we have a business there, etc.).  Peru is fairly lenient and tolerant, but you should know Spanish and be willing to go with the (slow) flow).

If THSHTF, I still have not decided whether to run there or to fight here.

Thu, 06/03/2010 - 10:07 | 391573 BobPaulson
BobPaulson's picture

Uruguay.

Wed, 06/02/2010 - 19:28 | 390713 nmewn
nmewn's picture

How odd.

"Produced from gold mined in the United States, American Eagles are imprinted with their gold content and legal tender "face" value."

http://www.usmint.gov/mint_programs/american_eagles/index.cfm?action=ame...

Operative words...legal tender...high priced in fiat legal tender dollars (or is it the value of a paper dollar is so much less than "a dollar"???)...but there it is...suprisingly it actually say's "dollars" at 4-5 o'clock on the eagle side...very odd occurence on someting that's not money ;-).

Thu, 06/03/2010 - 00:15 | 391138 RockyRacoon
RockyRacoon's picture

Even more odd:  1964 and earlier coins!  Dimes only say "one dime" on them, quarters have "one quarter dollar".  How odd since they are pure silver.

http://www.coinflation.com/silver_coin_values.html
Wed, 06/02/2010 - 17:24 | 390428 dudley
dudley's picture

Everyone needs to price in an 18% or more sales tax plus other forms of taxation that will be surely implemented at some point in the future in order to discourage PMs from competing against fiat money.

Wed, 06/02/2010 - 17:29 | 390439 faustian bargain
faustian bargain's picture

in order to discourage PMs from competing against fiat money

...or to boost the transfer of economic activity to the black market.

Wed, 06/02/2010 - 17:26 | 390432 Shiznit Diggity
Shiznit Diggity's picture

Capital gains on collectibles are not necessarily taxed at 28%. They are taxed at your marginal tax rate up to a maximum of 28%. Also, when you offset taxable losses against taxable gains, you do so beginning with the capital gains taxed at the highest rate and then, if you haven't used up the capital loss offset, in descending order by tax rate.

Thu, 06/03/2010 - 00:20 | 391148 Trial of the Pyx
Trial of the Pyx's picture

yeah, sometimes I think there are people who do not get it that there are other people here that may not be in the max tax bracket

 

"hey, isn't everybody rich as fuck?"

Wed, 06/02/2010 - 17:28 | 390434 Mercury
Mercury's picture

I thought the whole purpose of hoarding physical PM was to have it to barter or pay for stuff when the fiat currency system collapses or becomes totally untrustworthy for many transactions.  To store wealth in other words.  Once that scenario is in play the IRS probably won't be your biggest concern.

If you have to sell PM for dollars/fiat to settle a debt in same I guess the good news is that means the system hasn't collapsed yet.

Wed, 06/02/2010 - 17:28 | 390436 iLivedINhaitiOnce
iLivedINhaitiOnce's picture

I thought that silver eagles were real money. They say $1. So it is one dollar. If I paid $16 for a $1 coin, technically I took a hosing. Would that be a write off? If I sold a $1 coin for $16 who's to know what I paid for it originally. If APMX, GoldSeek ect.. bought them back, I would keep the sale under $9000.

I'm with rrbluefin on this one, lead hollow point variety is a great way to pay this cap gain if there really is one.

Wed, 06/02/2010 - 17:37 | 390460 Mercury
Mercury's picture

Silver bullets Keemosabe! Go Lone Ranger on their ass.

Wed, 06/02/2010 - 20:21 | 390789 Bendromeda Strain
Bendromeda Strain's picture

Bust a cap gain in that azz...

Wed, 06/02/2010 - 17:59 | 390499 JohnG
JohnG's picture

 

The cutoff for a CCR has been reduced to 5K.

Wed, 06/02/2010 - 18:48 | 390594 DosZap
DosZap's picture

The BUYER must report YOU..........so, your fooked.

Wed, 06/02/2010 - 19:18 | 390653 ZerOhead
ZerOhead's picture

Tell ya what... time to think like a Bankster.

I'll buy 1,000 of your silver eagles from you for $1 each... and I'll sell you 1,000 silver eagles of mine for $1 each... then we both get to keep our eagles and claim the tax deductible losses.... and thus end up getting free money back from the IRS to buy more eagles with!

(If they complain... kindly inform them if they didn't think it was only worth one dollar then why the fu%& does it say $1!... no law against being 'stupid' you know or George W Bush would be in jail! :)

Thu, 06/03/2010 - 00:19 | 391142 RockyRacoon
RockyRacoon's picture

1 ounce gold Eagles are legal tender.  Go to a used car dealer and make your best deal on any clunker on the lot.  Pay with your gold Eagle.  You get a receipt for the purchase price at $50.  The dealer has an instant loss on the sale.  You get to license the vehicle and pay sales tax on the $50 transaction.  Legally.

Wed, 06/02/2010 - 17:37 | 390456 Crab Cake
Crab Cake's picture

"...if you don’t want to mess with the tax hassle, use an ETF instead."

So, the IRS backed by our hostage government full of representatives who represent only corporations and wealthy interests wants to make it a "hassle" to buy and sell physical metal?  Your answer to this is, well if you'd rather not mess the "hassle" then you could just play the game they want you to in the fixed and rigged markets with an ETF.  Why, my oh my, that'd be a dandy idea if the fixed and rigged markets were, you know, actually free, fair, and transparent.  WTF. 

1.  Keep cash and eat the inflation.

2.  Invest in metals and let the IRS make you a criminal.

3.  Invest in the fixed and rigged markets.

I wonder which one the Fed would like you to do?  Hmmm.....

Stop working = Stop paying taxes.  Stop paying the mortgage if you can.  Stop buying anything that is not a necessity.  Stop investing and trading in fixed and rigged markets.  Stop banking completely, or at the very least with TBTF if you haven't already.

STAND UP AND BRING THE SYSTEM DOWN

Wed, 06/02/2010 - 19:08 | 390647 SWRichmond
SWRichmond's picture

Buy secondhand / used.

Thu, 06/03/2010 - 10:11 | 391586 chumbawamba
chumbawamba's picture

All of the above.

And above all, stay steadfast.

You WILL outlast the system, if you are prepared for a long fight.

Don't be discouraged, for in the end, the good guys win this one.

I am Chumbawamba.

Wed, 06/02/2010 - 17:36 | 390458 mrdenis
mrdenis's picture

The Gov is montering eBay sales/purchases  through pay pal .Anything sold over a price of 600. is required to be reported via 1099 both buyer and seller

Wed, 06/02/2010 - 18:51 | 390601 DosZap
DosZap's picture

A Female IRS Agent, just got taken the the woodshed, by her IRS employer, for selling on eBay, and not reporting the gains.......

It was like 10K, over a period of time.And the gains were not $600.00..................

Flea Mkts, etc, will be the best way to barter, sell.

Wed, 06/02/2010 - 17:44 | 390469 unky
unky's picture

Here in germany there is no tax on your profit of gold buy/sell if you hold your gold (no matter physical or paper) for more than one year (before you sell it again).

However you may do transactions with local dealers for smaller amounts (i am not sure - maybe below 10,000€) without identification, thus making it impossible for the government to tax you on that one.

How is the gold taxation in Canada? I just opened up a Kitco Pool Account and wondering about that.

Thu, 06/03/2010 - 04:41 | 391270 KevinB
KevinB's picture

Sales of gold in Canada are taxed as "capital gains".

When calculating capital gains, you can first deduct any accumulated capital losses from previous years (these are NET losses - the amount by which declared capital losses exceed declared capital gains from all prior tax years - CNIL can be carried forward indefinitely.) 

After you have calculated your net capital gains, you then add 50% of that amount to your taxable income for the year. Simple example - you buy 100 oz gold at $1,000, and sell for $2,000/oz. Capital gain = $100k. Taxable capital gain = $50k

This is added to your taxable income, and then taxed at your top marginal rate, which varies from 39% (Alberta) to 46% (Ontario) - I'm assuming you're not stupid enough to establish residency in Quebec - so the effective rate on each dollar of your actual gain is half that, i.e 19.5% in Alberta (you keep $80,250 of your gain) to 23% in Ontario (you keep $77,000 of your gain).

Tax rates vary from year to year; this is not intended to be up-to-minute advice. And please note that, while Canada does offer a lifetime $750,000 capital gain exemption, it only applies to specific investments, and PM's don't appear to qualify.

Wed, 06/02/2010 - 17:46 | 390471 sangell
sangell's picture

I knew some folks who panned and dug for gold as a hobby. They didn't have a lot, a few ounces collected over the years. How is that taxed?

Could it be advantageous, given the 28% capital gains tax, to ever consider grinding up your gold coins and either mixing them with genuine gold dust, nuggets etc. Some years ago a charity auction was offering a large piece of quartz just dripping with gold. It allegedly was found during the California Gold Rush era and never refined. How is stuff like that valued?

Thu, 06/03/2010 - 10:20 | 391610 chumbawamba
chumbawamba's picture

Those would be considered minerals is my guess.  Not sure how the IRS would tax them, if at all.  My guess is they wouldn't be considered taxable, in a similar or same category as jewelry.

But what prospector would be assinine enough to declare their find?

I am Chumbawamba.

Wed, 06/02/2010 - 17:51 | 390481 Quinvarius
Quinvarius's picture

If a designated custodian holds gold in an IRA for you, it is still tax exempt.

Wed, 06/02/2010 - 18:53 | 390604 DosZap
DosZap's picture

If it's a Traditional IRA, NO TAX...until you cash out.

Wed, 06/02/2010 - 18:00 | 390501 dryam
dryam's picture

Taxing gold is corrupt.  They devalue the dollar & then tax you on that devaluation.

I plan on picking up my gold located outside the country & immigrating to australia or new zealand.

I suspect the more the government tries to stop gold from being used as a currency the more it will drive up the price. 

Wed, 06/02/2010 - 18:04 | 390509 aaronvelasquez
aaronvelasquez's picture

I plan to GIVE gold to anybody whom I wish to purchase something from with a smaller number of FRNs at a later date.

Wed, 06/02/2010 - 18:59 | 390623 DoChenRollingBearing
DoChenRollingBearing's picture

Giving away your gold is perhaps the most powerful way of fighting a corrupt .gov.

Wed, 06/02/2010 - 18:11 | 390524 Steroid
Steroid's picture

When you bought an eagle it was $50. When you sold it it was still $50.

(The value was declaired by Congress, the only way which will count. Actually, this was even constitutional unlike with the paper tickets.)

Where is the difference for a tax base? Why should a bullion shop see this transaction differently? You don't want to challenge Congress.

Wed, 06/02/2010 - 21:01 | 390857 Crisismode
Crisismode's picture

It doesn't matter one iota what the face value is that is imprinted on the surface of the coin.

If you purchase a rare penny coin from a numismatic dealer, you may pay $500. for it.

You may sell it for $5000. sometime later.

You have a $4500. capital gain no matter what the actual stated value stamped on the coin is.

 

 

Thu, 06/03/2010 - 00:23 | 391151 RockyRacoon
RockyRacoon's picture

That is a transaction for a collectible coin (numismatic).  Your $500 cent has a basis for tax purposes.  A gold Eagle is not a collectible coin.  Different sort of transaction.

Wed, 06/02/2010 - 18:21 | 390544 HedgingInfinite...
HedgingInfiniteRiskIsNotPossible's picture

So one buys gold or silver to preserve purchasing power, in light of a fiat currency that is inflated away slowly year by year. And when he needs to exchange it for some scrip to buy some food? Tax him on his "profit".

 

Wed, 06/02/2010 - 18:22 | 390546 Tripps
Tripps's picture

gold bugs have a point. why would you pay capital gains let alone extra capital gains for convering REAL money ( gold) into Fiat Currency.

 

makes no sense. and even if you assume a barter/conversion from 1 to another is equal treatment in the eyes of what is MONEY, there would be no gain or loss..just a swap

 

Wed, 06/02/2010 - 23:58 | 391118 saulysw
saulysw's picture

I think you have captured the essence of why Bankers and the Gov do NOT like gold. It bypasses them.

Thu, 06/03/2010 - 00:25 | 391155 RockyRacoon
RockyRacoon's picture

Bingo!  You have earned that cigar.  TPTB hate sound money because it is impossible to make (inflate) at will, and it is not trackable for tax purposes. 

Wed, 06/02/2010 - 18:24 | 390550 Tripps
Tripps's picture

so my point is they need to change the law #1

 

#2, if anything the current law seems to encourage folks to keep their gold long term or forever, thus supportting prices, exactly opposite you would think "they" would want

 

yet another reason why need to redo the whole irs code at the individual and corp. level

Wed, 06/02/2010 - 18:34 | 390567 cossack55
cossack55's picture

I don't know about you, but if I ever reach the point of selling PMs those that made the laws will be in jail waiting for the noose. Moot point.

Wed, 06/02/2010 - 18:48 | 390593 Burnbright
Burnbright's picture

You know you can completely avoid taxes by just using gold and silver as money and just trade it, you know barter, for the things you need. It would also help the person you were making a trade with avoid taxes as well.

Well thats what I plan to do.

Wed, 06/02/2010 - 18:58 | 390616 Joe Sixpack
Joe Sixpack's picture

And if that happened, what would gold and silver buy?

 

http://www.gold-silver.us/what_silver_gold_buys.html

Wed, 06/02/2010 - 20:21 | 390790 ATM
ATM's picture

Yup, my 1963 silver quarter, which bought a gallon of gasoline  then now buys 1.3 gallons of the same fuel.

Not only is that preserved purchasing power it was increased by a third!

Thu, 06/03/2010 - 02:07 | 391220 AnAnonymous
AnAnonymous's picture

Oil price is manipulated.

Wed, 06/02/2010 - 18:58 | 390617 Bolweevil
Bolweevil's picture

If you see a guy in white Adidas warm-ups holding a sign on a corner with a BIG gold necklace on MainStreet USA that says:

No taxation with fu%ked up representation.

It's me.

Wed, 06/02/2010 - 19:11 | 390658 Dimeboy
Dimeboy's picture

One thing you can import into the US (say from Canada) without tax or duties is precious metal coin - such as junk silver, silver dollars or even Gold, platimum and palladium Maple Leaf Bullion coins because they are face valued foreign currency as well as precious metal. No rule says it has to be in current circulation as long as the issuing government has not de-monetized it.  Canada has never demonetized any coin of any denomination or composition since it started minting in 1864. Canadian gold Soveriegns are quite popular for this reason. US Customs hate them as well for this reason. They can still be exchanged at the bank for 10 dollars in any other form (if you were foolish enough to do this with half a troy ounce of 24k gold!)

Just have your Canadian dealer quote the Harmonized Tariff code 7118.90 section 00 through 55 for the appropriate precious metal coin.  (Some states will apply tax, check the harmonixed tax code: http://www.usitc.gov/publications/docs/tata/hts/bychapter/0910C71.pdf

Of course, selling is a different matter - your problem.  Here in Canada all pure PMs are tax free - they are considered money for some strange reason. /:^)

 

Wed, 06/02/2010 - 20:25 | 390797 FranSix
FranSix's picture

I don't know why this doesn't make a good argument for gold mining shares.

Wed, 06/02/2010 - 20:51 | 390841 Dimeboy
Dimeboy's picture

Once you have all of the hard money on hand that you need to sustain yourself and loved ones in a crisis (who will all of a sudden like you), then paper away.  Junior miners are a great bet right now and would certainly be my next choice.

Still have to have the real deal in your mitts though, should SHTF, or TEOTWAWKI etc.

e.g: Get an old receipt for some ammo and try loading your firearm with it and see how much self defence power you get.....

Wed, 06/02/2010 - 20:54 | 390845 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Federal Taxes are unconstitutional.

Wed, 06/02/2010 - 20:55 | 390847 Kreditanstalt
Kreditanstalt's picture

What IS this?  ZH issuing an exhortation to bend over backward to follow to the best of one's ability each and every one of Leviathan's regulations?

Let's get it straight: "buying" gold is a treasonous act in itself.  It is a direct statement of non-belief in government.  It is an act of personal and financial LIBERTY.  Gold stands for freedom and the "buying" of it indicates a desire to operate above and beyond the current socialized Ponzi economy.  Gold is a blow against the banks, against fractional reserve banking and in opposition to lending non-existent printed "money"...

So why the hell would a gold-holder "do his best" to follow each and every edict?

YOU KNOW WHAT TO DO.

Wed, 06/02/2010 - 23:44 | 391093 DoChenRollingBearing
DoChenRollingBearing's picture

+ $1220 Kreditanstalt.

You are hereby invited to the party that Gordon_Gekko and I and various others will have if/when gold reaches fofoa's $50,000 / oz (assuming society still functions, etc.).

I am going to have to start a list...

Thu, 06/03/2010 - 00:04 | 391122 saulysw
saulysw's picture

I'll bring a bottle of Green Fairy if I can come.

Thu, 06/03/2010 - 00:04 | 391123 Kreditanstalt
Kreditanstalt's picture

Matter of time only...will $1300 be enough for an invite?  Am I a nut?  Not really; when gold reaches $50,000 everyone will suffer - only we'll suffer less. 

It's all relative. 

Thu, 06/03/2010 - 00:28 | 391159 RockyRacoon
RockyRacoon's picture

I'm a charter member of the $50K Gold Soiree!

Wed, 06/02/2010 - 23:10 | 391034 proLiberty
proLiberty's picture

Here is the way I have been softening up retail cashiers in my area: when paying, just before I open my wallet, I ask "will you accept Federal Reserve notes"?  95% will say no.  I then produce an FRN and say this is all I have.  I generally get a curious look and then the transactions proceeds.  I now run into cashiers to whom I have played this joke on in the past, even some who have switched employers.

Is it time to start carrying a 1/4 ounce US bullion piece and ask if I can pay with gold?  If just a few people start doing that in a given area, maybe some ice will get broken with merchants.

 

Thu, 06/03/2010 - 11:22 | 391837 chumbawamba
chumbawamba's picture

Silver, you fool, silver!

Hold onto your gold for when Revolution 2.0 needs funding.

I am Chumbawamba.

Wed, 06/02/2010 - 23:13 | 391039 proLiberty
proLiberty's picture

I would be happy to pay any tax due on the increase in wealth from holding precious metals.  So far there hasn't been any, despite how much the price changes in dollars.

 

Thu, 06/03/2010 - 11:25 | 391847 chumbawamba
chumbawamba's picture

Good one.  However, I don't think the IRS would see it that way, being that they are absolute and total idiots.

I am Chumbawamba.

Thu, 06/03/2010 - 01:04 | 391187 Hephasteus
Hephasteus's picture

The government is going to get restructured into a sleek streamlined version of itself.

The Department of Contempt Management

United States Hate Mail Delivery Service.

Thu, 06/03/2010 - 06:56 | 391318 Henry Chinaski
Henry Chinaski's picture

End game for investments under onerous tax rules.  That will change and people will wish for the good old days of 28%.

Thu, 06/03/2010 - 17:23 | 392732 Dimeboy
Dimeboy's picture

Silver it is, undervalued, undermined, low supply, high industial and investment demand, etc.

I'll get my gold making change with my silver for the high-roller hard money holders!

www.silvercoin.ca

Do NOT follow this link or you will be banned from the site!